Six months in the making, the British government’s independent film policy review, released Jan. 16, puts a great deal of responsibility in the hands of the British Film Institute as it goes about the business of, among other things, handing out the $41.1 million in film funding that had been the purview of the National Lottery.

And while the report, which surveys a wide swathe of biz reps, outlines 56 specific recommendations, a particularly noteworthy one is the call for U.K. broadcasters to step up and invest in the local film biz, with a not-so-subtle suggestion that licensing requirements be brought to bear against those who don’t comply.

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There are several reasons why the government commissioned the report. In the last 18 months, the U.K. film sector has seen its share of highs (“The King’s Speech” to “Inbetweeners,” “Tinker Tailor Soldier Spy”) to lows (the abolishment of the U.K. Film Council and other austerity measures); the amount of lottery funding allotted to film production is set to increase to $61.3 million by 2014; and it’s been 14 years since the last government report on the sector.

“At the time (that the film council was shuttered) the industry was generally furious,” entertainment lawyer Libby Savill, a member of the report’s review panel. “I think to a certain extent this review had been born out of an appeasement. It was a really good opportunity to look at the landscape.”

Former Labour culture secretary Chris Smith (who commissioned 1998’s report), hand-picked eight panelists — producer and Big Talk topper Matthew Justice, scribe Julian Fellowes (“Downton Abbey”), Sony Pictures’ Michael Lynton, chief exec of exhib chain Vue Entertainment Tim Richards, Savill, founder and former CEO of Optimum Releasing Will Clarke, Film4 topper Tessa Ross and producer and chair of the British Film Commission Iain Smith — and talked to some 300 entertainment industryites through a series of interviews and meetings in creating the report, which called on broadcasters — specifically commercial web ITV and satcaster BSkyB — to do more in terms of investing in British film production and becoming more aggressive in their acquisition policies for pics.

With some 80% of all film viewing by Brit auds consumed via TV, “the role broadcasters have in putting British film in front of British audiences is extremely important,” Chris Smith said.

Film4 and BBC plow a combined $41.6 million per year into British films, but they are the only contributors. The report called for a stronger commitment by all broadcasters in order to sustain the business.

The report even suggested that the government look at “legislative solutions, including new film-related license requirements” should discussions with broadcasters prove unfruitful.

“I think Film4 and BBC Films are a major asset to independent filmmaking,” says BBC Films creative director Christine Langan. “If one of the other broadcasters wanted to set up a unit that operated similarly to bring indie films to their own channels, I think it would be relatively low-cost and a massive gain for everyone.”

The review also recommends that for producers, the U.K. tax credit be treated as an equity share in the film, recouping at the same rate with other equity players, including the BFI, for reinvestment in future projects. Recouped funds would sit in a BFI trust and handed out for successful producer’s next pics.

“Producers (said) that they were fed up (with) being treated like children when it came to lottery grants,” Savill says of the way even producers of a successful film have to queue up for coin for their next project. “As entrepreneurs, they should be able to take the opportunity, run with it and improve their business models so they don’t have to come back and ask for more.”

And while of course, not all pics recoup 100%, “little steps can lead great results,” says one producer.

“We’ve always been told that there’s not that much money to go around for recoupment,” says the producer. “But the smallest amount of money can be transformative to an independent filmmaker. We need to better equip our producers with creating sustainable businesses, which will enable them to make better films.”

Additionally, the review proposed a new joint-venture fund to align producers more closely with U.K. distributors.

The fund would allow producers to access lottery funding to share the cost of a film with distribs pre-buying U.K. rights to their projects, thereby reducing a distrib’s risks at the same time as it gives producers a stake in the U.K. rights to their films.

Distribs, however, were unsure of the effect such a plan would have on their buying habits.

“I like the idea of working with producers earlier,” says Lionsgate U.K. topper Zygi Kamasa. “But there’s not much in the report generally that will aid distributors to significantly make greater investment in British films.”

Also among the points of recommendations were familiar requests — strong protection against piracy, increased support for the development of skills in the vfx marketplace, and better film education. Surprisingly, however, there was no mention of addressing the notoriously low percentage from film rentals that indie distribs receive (around 28% of the B.O.), but exhibs were urged to help find a way to improve the economics of the Virtual Print Fee for niche distributors — right now, a distrib pays the VPF each time a film moves from one cinema to another, adding cost. The report calls for a structure “that puts the independent distributor in an economic position which is as good as, or better than, the 35mm model.” Exhibs were also encouraged to step up their discussions with distribs on theatrical windows.

“I hope exhibitors become more flexible about windows,” says Savill. “But in the case of rentals, we can’t really change commercial practices.”

But some say the report’s recommendations put too much of a burden on the BFI. “Virtually every single point calls on the BFI,” says partner Richard Philipps at law firm Reed Smith. “It doesn’t have the manpower or resources to do all of this, and will need the government to commit to tooling them up to see (this) through.”

And while the BFI and the Dept. of Culture, Media and Sport, which helped commission the study, will pour over the proposals for the next few months, as one insider says, “One thing is for sure: the industry needs the BFI to be accountable. It’s the film agency for Britain. It’s about the responsibility of dishing out all of that money.”

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